(Reuters) - Akamai Technologies Inc (AKAM.O) forecast current-quarter revenue and profit above analysts’ estimates as the company benefits from an aggressive push into cloud security and a stabilizing media content delivery business.
Shares rose 10.6 percent to $57.40 in after-hours trading on Tuesday after the company also beat third-quarter estimates.
Akamai’s traditional media content delivery business has been under pressure as its large media customers, such as Apple Inc (AAPL.O) and Amazon.com (AMZN.O), develop in-house capabilities to handle their web traffic.
Revenue in the media division has dropped around 15 percent in the past seven quarters but steadied in the third quarter with just a 1 percent decline.
“Year-over-year traffic growth on the Akamai platform accelerated in Q3 to the highest levels that we’ve seen in 2 years,” Chief Executive Tom Leighton told Reuters.
Akamai has also been adding top names as customers. Japan's Nintendo Co Ltd (7974.T) in August used the company's media delivery solutions to simultaneously release its mobile gaming app "Super Mario Run" and new gaming console "Nintendo Switch". (bit.ly/2i1O8ws)
The company forecast fourth-quarter revenue of $638 million to $656 million, above analysts’ average estimate of $641.2 million.
Akamai said it expected adjusted earnings of 60 cents per share to 65 cents per share, including a 4 cents impact of the Nominum acquisition in October.
Analysts on average were expecting earnings of 59 cents per share, according to Thomson Reuters I/B/E/S.
As its media delivery business faced challenges, Akamai beefed up its security and web performance businesses.
Revenue in the cloud security business surged 27 percent to $121 million in the three months ended Sept. 30.
“Our leading Kona Site Defender solution continued to be a primary driver of this growth, and I think recent events can help you understand why,” said Leighton.
The company’s net income fell to $60.5 million, or 35 cents per share, in the third quarter ended Sept. 30, from $76 million, or 43 cents per share, a year earlier.
Excluding items, the company earned 62 cents per share, beating analysts’ average estimates of 59 cents.
Total revenue rose 6.4 percent to $621.4 million, trumping estimates of $610.7 million.
Akamai’s shares gave up some gains to trade at $51.91 in extended trading. They have dropped around 22 percent this year.
Reporting by Sonam Rai and Supantha Mukherjee in Bengaluru; Editing by Sriraj Kalluvila